d 8300 partnership
TRANSCRIPT
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Amity Business SchoolMBA, Semester 2Legal Aspects of Business
Ms. Shinu Vig
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Indian Partnership Act, 1932
Section 4 says Partnership is the relation between
persons who have agreed to share the profits of a
business carried on by all or any of them acting for all.
Essentials of a Partnership:
1. Association of two or more persons.
2. Agreement3. Business
4. Sharing of profits
5. Mutual Agency (Cox v. Hickman)
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Definitions:
Partner: Persons who have entered into partnership with
one another are called individually partners.
Firm: Collectively all the partners are called a firm.
Firm name: The name under which their business is
carried on is called the firmname.
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Maximum Limit on number of Partners :
a) In case of a partnership firm carrying on a banking
business 10
b) In case of a partnership firm carrying on any otherbusiness 20.
Classification of Partnership:a) Particular Partnership
b) Partnership at will
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Partnership Deed:
a) Name of the firm
b) Names and addresses of partners
c) Nature and place of business
d) Commencement and duration of partnership.e) Capital contribution of each partner.
f) Profit sharing ratio.
g) Interest on capital and drawings.
h) Rights, powers and duties of partners.
i) Method of valuation of goodwill.
j) Method of valuation of assets on retirement or death
of a partner.
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Types of Partners:
Actual/ Active partner
Sleeping/ Dormant partner
Nominal partner
Partner in profits only (example- minor partner)*
Sub-partner
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*Position of a Minor as a Partner:
a. Before the admission of a minor as a partner, there
must be an existence of partnership.
b. There must be mutual consent of all the partners.c. A minor can be admitted only to the benefits of
partnership.
d. There can not be a partnership consisting of all the
minorsor
of one major and all other minors.e. Within 6 months of his attaining majority, the minor
partner has to exercise his option whether or not to
become a partner.
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Registration of Partnerships:
Under the Act the registration of a firm is not
compulsory but is desirable. As the registration is not
compulsory, it can be effected at any stage.
Effects of non-registration:
i. No suit by a partner against the firm or other partner.
ii. No suit by the firm against third parties.
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Duties of partners:
1. To attend diligently.
2. Not to claim remuneration for taking part.
3. To contribute equally to the losses.
4. To indemnify the firm for loss caused by his willfulneglect or by his fraud.
5. To hold and use firms property for business purpose.
6. To account for and pay the personal profits from
transactions of firm.7. Not to carry on a competing business.
8. To account for and pay the personal profits from a
competing business.
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Authority of Partner
Express Authority
Implied Authority
The act of the partner will be within the
implied authority if:a. It is done in ordinary course of business
b. It is done in the firms name.
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Acts outside implied authority To submit a dispute of firm to settlement
To open a bank account on behalf of firm in his own
name
To withdraw a suit filed on behalf of firm
To compromise any claim by the firm
To acquire immovable property on behalf of firm
To transfer immovable property of firm
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Dissolution of partnership Dissolution of firmOld partnership comes to an
end and a new partnership
comes into existence.
The business continues
under firms name.
All the assets are revalued.
Old partnership comes to an
end but no new partnership is
formed.
The business does not
continue under firms name.
Under firms dissolution allthe assets are realized.
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Modes of dissolution of a Firm:
A. By an order of the court.
B. Without the order of the court1. Dissolution by mutual agreement.
2. Compulsory dissolution (Insolvency, Unlawful)
3. Dissolution on the happening of a contingency
(expiry of term, completion of term, death of apartner)
4. Dissolution by notice
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Dissolution by order of the Court
The Court may, on the receipt of petition by a
partner, order for dissolution on the following
grounds:
1. Insanity
2. Permanent incapacity
3. Misconduct
4. Persistent breach of contract
5. Transfer of interest6. Perpetual losses
7. Any other just and equitable ground